Although the semiconductor industry recorded its highest-ever revenues last year, it saw a cyclical slump in the year’s second half. The sector faltered due to macroeconomic challenges, supply chain interruptions, and a dampened end-market demand.
So, quality chip stocks Camtek Ltd. (CAMT) and inTEST Corporation (INTT) could be worth adding to your watchlist.
While semiconductor sales declined in the first quarter of 2023, sales in March 2023 grew by 0.3% compared to February 2023, the first month-over-month increase in a year.
John Neuffer, SIA president and CEO, said, “Semiconductor sales continued to slip during the first quarter of 2023 due to market cyclicality and macroeconomic headwinds, but month-to-month sales were up in March for the first time in nearly a year, providing optimism for a rebound in the months ahead.”
Moreover, government initiatives are expected to boost the industry. The global semiconductor market is expected to grow at a 13.1% CAGR until 2032.
Investors’ interest in chip stocks is evident from the VanEck Vectors Semiconductor ETF’s (SMH) 11.3% returns over the past six months.
Let’s delve deeper into the fundamentals of the stocks.
Camtek Ltd. (CAMT)
Headquartered in Migdal HaEmek, Israel, CAMT develops, manufactures, and sells inspection and metrology equipment. It serves various semiconductor industry segments and sells its products across the Asia Pacific, the U.S., and Europe.
CAMT’s forward EV/EBIT multiple of 14.22 is 15.2% lower than the industry average of 16.77. Its forward non-GAAP P/E multiple of 16.07 is 17.9% lower than the industry average of 19.58.
CAMT’s trailing-12-month ROCE of 23.59% is significantly higher than the 0.72% industry average. Its trailing-12-month ROTA of 11.81% is significantly higher than the 0.36% industry average.
CAMT’s total current assets came in at $561.57 million for the period that ended March 31, 2023, compared to $556.96 million for the period that ended December 31, 2022. Also, its current liabilities came in at $74.45 million, compared to $88.50 million for the same period.
Analysts expect CAMT’s revenue to increase 10.9% year-over-year to $324.37 million in 2024. Its EPS is expected to grow 10.5% to $1.86 in 2024. It surpassed EPS estimates in all four trailing quarters. The stock has gained 6.7% over the past six months to close its last trading session at $27.01.
CAMT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CAMT has an A grade for Momentum and a B for Sentiment and Quality. Within the Semiconductor & Wireless Chip industry, it is ranked #26 out of 91 stocks. Click here for the additional POWR Ratings for Growth, Value, and Stability for CAMT.
inTEST Corporation (INTT)
INTT supplies test and process solutions for use in manufacturing and testing in automotive, defense/aerospace, industrial, life sciences, security, and semiconductor markets worldwide. The company operates through three segments: Electronic Test; Environmental Technologies; and Process Technologies.
On April 18, 2023, INTT announced that its wholly owned subsidiary, inTEST Thermal Solutions, has become a distributor for Stellar Scientific (“Stellar”), an equipment supplier to the scientific community focusing on research and development.
Stellar Scientific and inTEST Thermal Solutions have joined forces to provide clients with a broad array of inTEST’s North Sciences Ultra-Low Temperature (ULT) biomedical freezers. Importantly, the collaboration widens market prospects for North Sciences goods through Stellar’s GSA contract to service U.S. government agencies.
INTT’s forward EV/Sales multiple of 1.81 is 30% lower than the industry average of 2.59. Its forward Price/Sales multiple of 1.77 is 30.1% lower than the industry average of 2.53.
INTT’s trailing-12-month ROCE of 17.19% is significantly higher than the 0.72% industry average. Its trailing-12-month ROTA of 9.43% is significantly higher than the 0.36% industry average.
INTT’s revenue came in at $31.92 million for the fiscal first quarter that ended March 31, 2023, up 32.5% year-over-year. Also, its non-GAAP EBITDA increased 126.1% year-over-year to $4.83 million. Its non-GAAP net earnings and EPS came in at $3.27 million and $0.29, up 158.2% and 141.7% year-over-year, respectively.
Street expects INTT’s revenue to increase 10.9% year-over-year to $129.61 million in 2023. Its EPS is expected to increase 17.2% year-over-year to $1.16 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 202.1% to close the last trading session at $20.60.
INTT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #25 in the same industry. It has an A grade for Momentum and a B for Growth. To see additional INTT’s rating for Value, Stability, Sentiment, and Quality, click here.
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CAMT shares were trading at $27.87 per share on Monday afternoon, up $0.86 (+3.18%). Year-to-date, CAMT has gained 26.91%, versus a 8.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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